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Unformatted text preview: quantity. The converse is also true. Graphic analysis visually illustrates this. Price ceilings, like rent controls, are legal prices set by government below equilibrium and they create shortages. Price floors (supports), like the minimum wage, are legal prices set by government above equilibrium and they create surpluses. Some market failures include: lack of competition, externalities, public goods, and income inequality. NEW CONCEPTS INTRODUCED price ceiling market failure externality price floor public good...
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- Spring '08